BA flies into pension turbulence

BA staff are meeting pension trustees in an attempt to force them to do a U-turn on a move that will see staff pensions, in some cases, drastically cut. That's because payments are linked to the Consumer Prices Index (CPI) rather than the (much) higher-rated Retail Price Index. A recent move.

Anger

BA claims such a cut will help them slash their £3.7bn pension deficit by almost £800m. THe government has also moved in this direction recently, switching public sector pensions to the CPI rate.

You can understand why BA staff are angry: the CPI rate is currently 3.1%; the RPI, which includes housing costs, is 4.6% (recently fallen). A big difference. Already some existing BA pension trustees have quit on the development.

Promises, promises

The Airways Pension Scheme (APS) was originally set up to adopt whatever public sector inflation index was used. And that has changed. Also, pension members are also angry because they made very clear back in the 1980s that they wanted to retain the RPI link - despite cash offers to change.

However APS trustees still have the discretionary capacity to not fall in line, as well as award any discretionary payments. They will also have to acknowledge popular support. If any overwhelming majority of APS members support the fight - as looks likely - they will have to tread carefully.

It's worth bearing in mind that several of the big public sector unions are now asking for a judicial review on the RPI/CPI issue.

What price is a promise - and can a promise simply change?

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